The Nairobi Securities Exchange(NSE) Derivatives Market has grown steadily since its launch in July 2019, with turnover growing from KSh 20.5 Million in 2019 to KSh 148 million by the close of H1 2021.
NEXT is the second derivatives market in Africa.
Derivatives turnover up 668%
The H1 2021 performance marks a 668% turnover gain over a similar period in 2020. Year to date, the increase in trading activity has also led to a 385% increase in average daily turnover compared to 2019 and 2020 levels.
Derivatives are defined as investment tools whose value is derived from underlying assets such as currencies, bonds, commodities, interest rates and market indexes, and stock value based on the expected future price movement.
Next enable investors to make a gain or hedge against losses by taking a bet on the future price movement. It also allows one to trade Equity Index Futures and Single Stock Futures.
According to Geoffrey Odundo, Chief Executive Officer of NSE, the response towards NEXT demonstrates the confidence the market has despite a constrained and harsh economic environment due to the COVID-19 Pandemic.
“We are proud to cross the two year mark today and to be an Exchange leading in innovation in line with one of our key priority areas to increase product uptake of our alternative products by our investors,” said Odundo.
Over the past two years, NEXT has grown as a market and witnessed milestones such as the launch of the Mini NSE 25 index futures contracts, increasing liquidity and allowing more exposure to the equities market through the equity index futures contracts.
Additionally, In February 2021, the NSE introduced real-time Market data on the Elektron Real-Time platform offered by Refinitiv, a leading global financial markets infrastructure and data provider.
This initiative made Refinitiv the first international data vendor to onboard the NEXT data, extending the NSE derivatives market regionally and globally.
To enhance uptake, the NSE continues to engage with key stakeholders.
Specifically, the NSE is enhancing the knowledge and training of key market participants, addressing the need to update Investment Policy Statements (IPS) that govern local institutional assets with administrators, trustees and fund managers; and onboarding of online trading members who have built a sizeable community of active retail investors.
The NSE recently onboarded EGM Securities (the first online trading broker to offer NSE derivatives) and Scope Markets as derivatives trading members bringing the total number to 9.
A list of approved Trading Members can be accessed on the NEXT website. (https://www.nse.co.ke/next-derivatives-membership/accredited-members.html).
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